I am a UK-based writer and commentator with a longstanding and close interest in management. A career that dates back to the days before computers has seen me cover everything from popular music to politics with a lot else in between. But business has been my focus for more than 20 years – initially with the Financial Times and then with the Independent on Sunday, where I was part of the launch team. As well as writing extensively on management and related issues, including enterprise and innovation, for the paper and its sister publication, The Independent, I have covered these subjects for a variety of magazines. I also carry out research and analysis through the consultancy IndexB and continue to investigate business issues at the blog futureofbusinessblog.com. I have written three books, the most recent of which is ‘What you need to know about business’ (Capstone/John Wiley and Sons, 2010).

Operating In A Complex World Does Not Have To Be Complicated

Business is more complex today than it has ever been. According to the Boston Consulting GroupBoston Consulting Group’s Complexity Index, companies in the United States and Europe in 1955 – the year the Fortune 500 was created – typically committed to between four and seven performance requirements. Today, that figure is between 25 and 40. More crucially, perhaps, in 1955 hardly any of the performance requirements contradicted each other. Now, up to half of them do. Companies are expected to sell high-quality products at low prices, to have supply chains that are fast and reliable, to offer a globally consistent service that takes note of local needs, etc etc.

The BCG consultants see two drivers of this trend. First, shifting trade barriers and technological advances have provided customers with an abundance of choice – making them hard to please and less willing to accept compromises. Second, there is the growth in the number of “stakeholders”. Companies must answer to customers, shareholders and employees – all of whom are becoming more demanding – and also have at least an eye on the constantly changing needs of political and regulatory authorities. The current furore over the price of energy in the UK is a classic example of this tension.

Given all this, it is hardly surprising that leaders have made their organizations more complicated. With so many interests to be served, the obvious solution is to devise structures, procedures, rules and the rest to ensure that no issue is left untended. In fact, though, a new book from BCG argues that countering complexity with complicatedness in this way exacerbates rather than solves the problem. Yves Morieux, director of the firm’s Institute for Organization, and Peter Tollman, head of the People & Organization practice area in North America, suggest that the complicatedness destroys a company’s ability to get anything done.

This does not mean that the people who work in these businesses are not doing anything. On the contrary, they are putting in more hours than ever. It is just that so little of the effort is worthwhile. According to BCG, managers in the top quintile of the most complicated organizations spend more than 40% of their time writing reports and between 30% and 60% of their work hours in coordination meetings – that is, work about work. This means that they do not have a lot of time for their teams, which as a result are often misdirected and so are wasting a lot of their time, too. As Morieux and Tollman write in the soon-to-be-published book, Six Simple Rules: How to Manage Complexity without Getting Complicated (Harvard Business Review Press), “It’s hardly surprising that, based on our analysis, employees of these organizations are three times as likely to be disengaged as employees of the other companies we studied.”

Breaking free of this bureaucratic gridlock requires abandoning outdated management thinking and practices, they add. Particular targets are the “org chart” associated with the “hard” approach to management that began with Frederick W. Taylor’s espousal of scientific management and the focus on the pyschological needs and mind-sets of employees central to the “soft” approach to management originating in what became the human relations school. Although the two look like they counter each other, Morieux and Tollman suggest that they both seek to control the individual – an approach that is doomed to failure in the highly complex world of modern business. “The human factor isn’t the weak link – something to be minimized and worked around,” they write. “Rather, it is the key resource for coping with complexity. Companies need to invest in – and trust – the intelligence and ingenuity of their people by expanding their autonomy and room for maneuver.”

To help managers escape the hold of the hard and soft approaches to management, and so better manage business complexity, Morieux and Tollman have devised the six simple rules of their book title. The main idea behind them is to help create more value by managing complexity better. But the authors claim that as managers “peel away the stitches and patches” that have accumulated they will also eliminate complicatedness and its resulting costs. As such, the rules amount to what they call “a third revolution in management – ‘smart simplicity’.” Managing complexity and taking away complicatedness enables organizations to improve performance and engagement. This creates a virtuous circle where better performance creates more opportunities for people, more opportunities generate greater engagement and greater engagement encourages higher aspirations and contributes to even better performance.

It sounds convincing. But what are these rules? They are:

Understand what your people do.

Reinforce integrators (by giving units and individuals the power to foster cooperation).

Increase the total quantity of power so that people can be mobilized to satisfy the multiple performance requirements.

Increase reciprocity by such means as eliminating internal monopolies and removing some resources.

Extend the shadow of the future by creating direct feedback loops that impel people to do their work today in a way that will satisfy performance requirements that matter in the time ahead.

Reward those who cooperate, with consequent implications for transparency, innovation and ambitious aspirations.

In reality, then, they look far from simple. Or, rather, they might be simple in terms of message but are harder to live by. As Morieux and Tollman acknowledge, all the talk of moving beyond obsolete approaches does not mean that they are advocating the introduction of self-organizing teams and the end of management that is being talked of in some circles. There looks to be a lot of rigour required – and that may be beyond many organizations and their leaders. But for those prepared to cut through the management jungle, these basic instructions could just offer a path to a clearer future.

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